Non-employment duration and subsequent wage losses in the Brazilian labour market

Hilton Ramalho, Ignácio Tavares de Araújo Júnior and Paulo Monte

No 2, Série Textos para Discussão (Working Papers) from Programa de Pós-Graduação em Economia - PPGE, Universidade Federal da Paraíba

Abstract: This paper analyses the relationship between unemployment and its respective duration on subsequent salary. Despite of being a topic of intense debate in the labour market literature, there is little empirical evidence to support this perspective in the Brazilian labour market. Drawing on data from the Monthly Employment Survey (2008, 2009) and following the methodology proposed by Tunali (1986), plus an analysis of wage differential, the findings go in the same direction of earlier studies (e.g. Keltzer, 1998; Burda and Mertens, 2001; Arulampalam 2001; Arranz et al., 2010) by highlighting that unemployment duration generates a cost to employees represented in a subsequent wage loss. In other words, it seems that workers who have recently experienced unemployment spell have disadvantages in terms of wages compared to those who remained employed throughout the period under inquiry.

Keywords: Unemployment; Wages; Bivariate Probit (search for similar items in EconPapers)
JEL-codes: J20 J30 J64 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-lab and nep-lma
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